Fairness is a choice II

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This post was originally published on the Sense of Fairness blog (original post here)

Some British people have been shocked recently to learn that the nation’s economic malaise is leading its citizens to be poorer than some from the former eastern bloc. “On present trends, the average Slovenian household will be better off than its British counterpart by 2024” reported a Financial Times story late last year.

Slovenia has a further major advantage: it is a much fairer society. According to World Bank data, only Slovakia has a lower Gini coefficient among all 60 countries for which 2019 data is available. And like Sweden, the country provides evidence that fairness is a choice.

Slovenia was behind the iron curtain during the Cold War, and experienced the Yugoslav version of socialism. This saw different economic phases and differing approaches over time to fairness and equality, but as the country gained its independence and was freed from the shackles of the communist era it took a different route from other countries in the eastern bloc. Rather than adopt the wholesale reforms and abrupt shock treatment urged by the Washington consensus, Slovenia took a more gentle route into capitalism. As a more advanced economy already, it was able to argue that less of a shock was necessary.

That less abrupt approach allowed the country to maintain more fairness than its fellow eastern bloc nations – many of which saw an emergence of an oligarch class and of rampant inequalities. It was a painful period for Slovenia too, but – through a range of different policy choices and the influence of powerful unions – a less unfair one. And as a recent study shows, including a historic view of the country’s Gini coefficient (economists’ favoured measure of inequality), when even Slovenia’s more gentle route towards capitalism led to greater unfairness, the country chose political intervention to reassert a more fair society:

A new progressive income tax in 1994 curtailed the stark growth in inequality unleashed in the post-Yugoslav era. And on those occasions since then that unfairness has begun to grow in Slovenia, there has again been political action to lean against it and maintain levels of fairness that are almost unique in the world – and are enjoyed alongside growing wealth for the nation as a whole.

Over the most recent period for which data is available, the study shows that Slovenia enjoyed some of the fairest growth anywhere in the world. In the period 2008-2018, when many countries saw the income growth enjoyed by the richest outstripping that of the poorest by a margin, the country experienced something very different. Over that decade, the highest-earning tenth in the country enjoyed growth just over 20%, and that seen by all those in the top 60% by income was between 20% and 22%. The poorest tenth benefited from 23% growth in earnings; only the second poorest tenth benefited slightly less, with 18% growth. Fairly shared growth is possible. Fairness is a choice.

As with my conclusion on Swedish fairness, if the Slovenes actively chose fairness and have delivered it, alongside strong economic growth, so can others. We just need to choose fairness.